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Investigation of Unfair Internal Trading on 7 Groups

Posted May. 15, 2001 08:19,   


Fair Trade Commission (FTC) undertook an investigation of unfair internal trading on 7 conglomerates including Doosan and Shinsegae.

Lee Han-Uk, Director of Investigation Bureau of FTC, announced that ``the investigation of the documents of 7 conglomerates began from 7th.``

Investigation of the documents will be completed by the end of this month. And those conglomerates that have not been subjected to an investigation of unfair internal trading since 1998 or those that were newly designated as 30 top conglomerates this year, are chosen to be under inspection.

FTC notified `the document investigation` to 7 Groups including Doosan, Shinsegae, Hyosung, Hanaro Telecom, Young Poong, Oriental Chemical Industries, and Taekwang Industrial Co.. A total of 7 groups and 110 companies are under investigation.

Kohap was excluded from investigation, because among 3 affiliated subsidiaries, one is under court receivership and one is under liquidation procedure.

FTC sent 30 page preliminary investigation form to financial teams of all 7 business groups. The preliminary investigation form is devised to report on their respective insider transactions.

Once the preliminary investigation is completed by the end of this month, FTC is planning to launch an onsite investigations after synthetic analysis of data from Financial Supervisory Commission and the Investigation Bureau of FTC.

Director Lee said that thus far we have conducted onsite investigation without prior notice, but in order to relieve corporates` burden, we decided to investigate only after the end of preliminary inspections.

The focus of this investigation would be placed on illegal supports extended to group affiliates and persons in special relations with them, through unfair trade of Commercial Paper between group and subsidiaries, etc.

But the chosen groups expressed repulsive responses, saying this investigation is a tool to repress business sector.

At the time, FTC has announced to the press before undertaking the investigation, but at this time, FTC began the investigation without prior notice or announcement. Hence it is suspected that this investigation was undertaken for the political reason.

Choi Young-Hae moneychoi@donga.com